Cannex Capital Closes Acquisition of Pure Ratios and Provides 4Front Transaction Update

"We are incredibly pleased to welcome Pure Ratios into Cannex," Anthony Dutton, Cannex CEO, said.

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VANCOUVER, BC / TheNewswire / PRESS RELEASE June 11, 2019 – Cannex Capital Holdings Inc. is pleased to announce that it has closed its previously announced acquisition of 100% of San Diego, California-based Pure Ratios Holdings, Inc. in a cash and stock transaction.

Highlights

– Pure Ratios has authentic positioning in the cannabinoid wellness segment with a solid foundation in California;

– Pure Ratios has expertise integrating cannabinoids into a variety of form factors including a patented 96-hour transdermal patch, its best-selling product;

– Pure Ratios co-founder and CEO, Chad Conner, is an experienced practitioner of holistic medicine and a recognized public speaker on cannabis and alternative approaches to wellness.

The Pure Ratios brand was established in 2015 to develop and distribute products that combined holistic wellness concepts with CBD, THC, and other cannabinoids, first in California and then nationally. Its first products were created by combining traditional Chinese medicines with cannabis and hemp-derived CBD. Pure Ratios’ CBD products are sold online, through a network of naturopathic medicine practitioners, and in over 300 health food stores, while its THC-enhanced products are sold by licensed California cannabis manufacturers and distributors, as well as being manufactured and distributed in other states by licensed cannabis businesses that license Pure Ratios’ intellectual property.

"We are incredibly pleased to welcome Pure Ratios into Cannex. Pure Ratios’ focus on wellness products is a terrific complement to Cannex’s existing suite of adult-use cannabis brands. We looked at numerous companies in the CBD/wellness space, but we connected with the authenticity and unique positioning which Chad and his team have built in Pure Ratios," Anthony Dutton, Cannex CEO, said in a public statement. “Since we signed the binding LOI in February, which included a modest loan to jumpstart growth, we’ve seen truly impressive month-over-month revenue growth that we expect to continue post-acquisition. With our pending business combination with 4Front Holdings, LLC, we are particularly excited by how the combined capabilities and geographic reach can extend growth for Pure Ratios and the collective platform.”

Cannex will pay Pure Ratios’ shareholders consideration of US$1 million cash, 3,500,000 shares of Cannex common stock, and assumption and/or repayment of up to US$500,000 debt. Additionally, Cannex will provide US$1 million growth capital to Pure Ratios, of which US$500,000 has already been provided by a secured convertible promissory note prior to closing. Upon the satisfaction of certain sales targets by Pure Ratios within one year of closing, Cannex will issue Pure Ratios’ shareholders up to an additional US$1 million, and upon the satisfaction of certain sales targets two years from closing Cannex will issue up to an additional US$1.5 million in Cannex stock priced at US$1.18. This transaction is not a significant transaction per applicable securities regulations and CSE policies.

4FRONT TRANSACTION UPDATE

“Cannex and 4Front are making substantive progress on meeting the requests supplied by the Department of Justice within the second request for information related to our HSR filing,” said Anthony Dutton. “It remains challenging to offer a precise timeline. However, it is my expectation that we can navigate this process within the next several weeks and provide a more concrete closing timeline shortly. Both parties remain committed to consummating the transaction as efficiently as possible and we look forward to having this administrative burden behind us to fully harness the benefits of this combination.”